What the Shell?

0:09Hello and welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg with Emily Peck of Axios. Hello, hello. And Elizabeth Spiers of the New York Times. Hello. And Emily has been hard at work doing actual reporting this week into shell companies. So we are going to talk to Emily all about shell companies and what they are and whether they are nefarious. And segue beautifully into a discussion of Josh Kushner and Bob Iger and their purchase of the LA Lakers, which somehow is going to become a conversation about Parmesan and cows and blockchain in Italy.

0:55And somewhere a man with a bin on his head is going to make an appearance. We have a Slate Plus segment about what happens when a journalist gets paid$6 million for nothing in particular. We're going all over the world on this one. So stay tuned. It's all coming up. Slate money. Thank you.

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2:25Okay, so it's August. It's the summer. We collect seashells on the seashore. And Emily, you've been collecting shells as well, right? Well, I want to collect shells, but the Treasury Department is making it harder to really know more information about said shells. Seashells, said shells. The point is that... The point is, if there's a hermit crab inside the shell, that crab no longer needs to send a copy of its driver's license to the Treasury Department.

3:01Elizabeth Spiers: Yeah, that's exactly right. Our listeners are so confused right now. So, yeah, let me just get the news out. So what happened was earlier this week, the Treasury Department said it was going to scrap this rule, scrap part of a law actually passed in 2021, where shell companies, these are companies that are registered to anonymous owners that don't really have a lot of employees. Or any employees, like no operations. No real business. They had to register with Treasury. They had to say, like, this is my name. I am the owner. Or they had to say who their beneficial owners were. Those are people that might not fully outright own the company, but have a controlling interest in the company, share a driver's license or some kind of form of ID.

3:50And the Treasury would maintain a database of shell companies and their owners. And the database isn't public. It's a private database that law enforcement can go and they can, you know, follow the money, find the drug traffickers, find the human traffickers, find the wrongdoers, whatever, do their little investigations that they like to do. So the idea is that there are a million shell companies in America. There are literally millions. It is incredibly easy to set up a company. Anyone with a Stripe account can literally set up a company in three clicks. And people do for a myriad of reasons.

4:29And the overwhelming majority of those companies exist for perfectly licit reasons. Now, I am confused, a little bit confused, I have to admit, about why exactly there are so many and why so many are necessary. But one of the things I learned when I moved to America is that everyone has like LLCs and S-Corps and trusts and all of this kind of stuff. It's just like in the water somehow in this country. But by the same token, if you have illicit purposes, then creating some untraceable LLC or S-Corp or something can help you hide your tracks. And so back in 2021, this law was passed saying you can set up an LLC or an S-Corp or whatever it is.

5:14But if you do, or sometimes even a trust, but if you do, just like tell us who the human being is who actually kind of benefits, who kind of controls and owns this stuff. That's what beneficial owner is. It's part of this idea of piercing the corporate veil. You can be like, oh, yes, this company is owned by that company. And that doesn't tell you anything. You know, like, ultimately, once you go back down the chain of companies owning companies, like, who is the human being whose ownership? Everything in the world is owned by someone.

5:44Elizabeth Spiers: I mean, I think the, not even the elephant in the room, the glaringly obvious thing is just that Trump has a lot of shell companies. Also, you know, this bill was, had bipartisan support, and it was co-sponsored by Marco Rubio, who was very proud of it. He called it the most significant anti-corruption and money laundering law in decades. And then Trump tried to veto it, and Congress overrode it. Yeah, he did. And Congress overrode it. And so now I'm not really clear on what's happening. Like, is he just refusing to enact something that Congress? It's actually worse than that. He's basically, yeah, there's like the law of the land.

6:21And he is just like, I am the executive branch and I don't need to do what the law tells me to do. And in fact, I'm going to take all of these records that I am legally required to collect and I'm going to delete them. They claim that it's about, oh, it's so burdensome to do the reporting, but it's not burdensome to have reported. There's no burden associated with, you know, having reported in the past. And there's no reason for them to delete these things, unless, Emily, you've asked Treasury and they've given you a reason. What happened was the law passed over Trump's veto. The law, it passed like two weeks before Biden was inaugurated.

7:00So it fell to the Treasury Department then to sort of like, it's really interesting for policy nerds. Congress passes laws that are really complicated and then passes the football over to the executive branch and all these myriad agencies and bureaus inside of it and is like, figure out how to make this work. And it's interesting how in this case, that was like breaking down well before the second Trump administration because they passed the football over to Treasury and the FinCEN Bureau gets to work on this regulation. Now, this is a bureau that deals with typically like big companies, banks, like big institutions with lots of employees and lawyers.

7:40Now they're dealing with a regulation that mostly covers companies with no employees or 20 or fewer. And they have a very powerful lobbyist representing them in the small business sector. and the lobbyists do not like this. They hate it. And they immediately start fighting against it. There's like multiple lawsuits are getting filed. They're calling up Treasury, like people I spoke to were telling me they're calling up and complaining about it constantly. They're not working hand in glove to make the regulation happen. It's not like the small business community was like, OK, we don't like this law.

8:12Let's work with the agency. I mean, they would argue they did some of this. Let's work with the agency to like make it happen. They worked against the agency to stop it. And like at the same time, I spoke to one of the representatives from the lobby yesterday and she was like, no, we tried to educate small business owners about what this was, but we were also, you know, sued to stop it in court. And then it went through the courts and you know how the courts are. So the whole thing was like a mess. So it passed in 2021. It was supposed to go into effect, I think a year later, if I'm remembering what it said, but it didn't.

8:46It just was like dragging and dragging. So then the Trump administration comes in a year ago and says, we're going to pause it. We're going to write a new rule about it. We're not going to do anything. They put it out for comment. Like they follow all the bureaucratic procedure. And then at the end of it, they're like, we're just not doing it. And that is really odd. I have a couple questions here. Number one, it does seem from what you're saying that the implementation of this law turned out to be much gnarlier than anyone expected. And I can definitely see a world where Scott Besson comes into office as Treasury Secretary.

9:26He looks at the vast amount of gnarly work and effort going into trying to implement this law. He sees effectively no benefit coming from all of this work and effort. And he's like, fuck this for game of soldiers. I'm just going to kill the whole thing because it's not doing any good, especially because he has a bunch of lobbyists screaming in his ear about why it's a terrible law to begin with. So then the question I have for you is, why did the lobbyists hate it so much? What was their beef with it? I can tell you what they say their beef is. So do you think that their ostensible beef is not their real beef?

10:02I don't know. Who can know into the souls of man? But I mean, the law's proponents, and there are many, and most countries, advanced economies, are doing this. They require you to have report who the beneficial owner is. That's standard. The US is an outlier. And all the proponents of the rule were like, it takes 10 minutes. If you're a legit business owner, you write your name, you show your ID, you're good. It's not a big deal. 10 minutes. Then I asked the business lobby, and she was like, no, it takes longer. Sometimes there are there's more than one owner. I mean, she was just like, it's so complicated.

10:38And everyone was stressed that if they would get in trouble, if they didn't update the information, that's what they say.

10:45Elizabeth Spiers: We've all gone through the process of setting up business entities. Most of it you can sort of do as a package deal. And the disclosure would really just be a checkbox on your ID. I still, and I realize that I think a lot of this is just always coming from the Trump administration because they're very anti-transparency. And Trump doesn't like being overruled on anything. He holds grudges when it happens and tries to go back and get his way on whatever the courts overruled or Congress overruled. But when you look at who actually uses shell companies, Russian oligarchs use them to hide assets. There's just a lot of circumstantial stuff around this that points to just being the administration not wanting to be transparent about anything.

11:26Although, to be fair, as you just said, you use them too. They are unbelievably common.

11:32Elizabeth Spiers: Well, I don't use shell companies. I don't have a reason to. I'm talking about the process of setting one up, though. A shell company in the formation is just a company that, in some cases, just isn't operating yet. I worked on some reverse mergers when I was an equity analyst. And in those cases, it was always a company that was a NASDAQ-listed company, and they'd sold all of their assets, but they still had the listing and the corporate infrastructure. And so they would do, another company would sort of reverse merge into the NASDAQ shell, and it was just a cheap way to go public. Yeah, public shell companies, though, are like 0.01 % of all shell companies.

12:07And I just want to say very quickly, just to make it clear, the Treasury has carved out all foreign owners here. Foreign owners do still need to report. It's just the U.S. owners who don't. Right, but I had in my story, like, there's millions of records in the database already, and over 90 % of them are U.S. owners. But the Russian oligarchs still need to report. But they usually, what I spoke to the anti-corruption people, when if you're a Russian oligarch and you want to set up a U.S. shell company, you find someone in the U.S. to do it. You wouldn't be registering as a foreign owner probably in this database.

12:37Given how much of a mess this act has been to implement and given how relatively new this database is, is it fair to say that so far it hasn't done a lot of good? There hasn't been a lot of visible benefit to it? I kept asking what the benefits were and the GAO had a big report about it And I guess it finally got off the ground, it looks like in 2024, and some law enforcement agencies had started using it, at least searching it. But I don't know what came of it, if anything. So, Elizabeth, like, is your general view of this story that criminals are criming and the Trump administration is perfectly happy with that and wants to make it easier for them to do their crimes?

13:23Elizabeth Spiers: Yeah, well, I think the Trump administration, or Trump personally, his attitude is, you know, we should be allowed to crime. I'm the president. I get to do whatever I want. And you see a lot of people around him who basically have adopted the same stance. And I think people like Bessent, privately, he probably doesn't have that stance, but he's in a position where he has to articulate whatever the administration wants him to at any point in time, because I just don't buy the idea that this is onerous for anybody. I think it's checking a box and showing an ID. Okay, so your answer to the question I put to Emily, when I was like, Emily, what is the reason why the lobbyists say to this so much?

13:59Elizabeth Spiers: They just don't want regulatory scrutiny. I think even the small business lobby, the way that they look at it, the less scrutiny, the better. And it doesn't matter whether there's some significant proportion of their lobby where they are actively trying to do crimes. They just don't want the government to be able to do that. Also, this database is only accessible by law enforcement professionals. So it's not even there's not even a privacy argument they can really make. Yeah, I haven't seen that made. You know, we've talked about the small business lobby like it's this all powerful lobby, I think, in a way that's probably a red herring.

14:31Elizabeth Spiers: I think the Trump administration wanted to do this anyway. And they have to construct a narrative where there is some pro get rid of this database constituency. So my theory, just to put my cards on the table, is that as we kind of flicked at a little bit earlier, the United States is very much an outlier in terms of a lot of financial transparency laws. I wrote a piece in Axios a couple of years ago about South Dakota trusts, which is completely other thing. But like people around the world set up companies and trusts in America to hold their assets for a bunch of different reasons, partly because there's like good rule of law here and, you know, it's safe and no one's going to expropriate it.

15:13But also because it's very easy to keep things like beneficial ownership secret. Like there was that big leak we got from like the Panama Papers and everyone's like, oh, oh, yeah, everyone was hiding their assets in Panama. Yeah, you know, I did put that in my story, actually. I had someone who used to work at Treasury was like, you know, you think that when people want to hide their money, they go to some duchy, some small island nation. But actually, a lot of them come to America. It's a great place to do it. A lot of them come to New Bud. A lot of them come to South Dakota. And so my theory of the case here, just to sort of make it explicit, is that it's really the financial services industry and the trust and estates industry and the money management industry, they are making a bunch of money from running all of these companies, setting up all of these companies, reporting back to the beneficial owners and all the rest of it.

16:02The money is in America. And the American authorities, writ large, generally like it when money is in America. And if this law is making it harder for money to be in America, they're like, well, we can fight crime in other ways. We don't need to fight crime this way. So let's just get rid of this a bit. That's where I went with the story. My bottom line was basically like people against corruption say it's bad, but it certainly attracts a lot of capital to the United States.

16:30Elizabeth Spiers: Yeah, I think I still sort of think there's a little bit of bad faith because why would you need to delete the database? I mean, if law enforcement's already using it, however minimally. Also, Felix, I think you should explain the craziness of South Dakota trusts because I didn't know that. I thought the fact that they're kind of behind the Caymans. Even more than the Caymans, actually. Basically, the financial services lobby has complete control over the South Dakota state government. They just basically rub a stamp whatever the financial services lobby wants them to do. And what that has resulted in is a regime in South Dakota where things can be unbelievably confidential and secret.

17:07There's no visibility into anything. There's like these tax consequences where if you leave your inheritance to a South Dakota trust, that South Dakota trust can exist in perpetuity without ever having to pay any tax. no one owns it. The person who puts the money in the trust is like, I don't own it anymore. It's the trust who owns it. And then the person running the trust can be like, I don't own it anymore. I don't own the money. I just run the trust. And then the beneficiary of the trust can be like, I don't own the money. But if the trustee wants to give me the money, they can and then I'll own the money.

17:38But for the time being, I don't own the money. And basically no one owns this money and it lives there tax free in perpetuity.

17:44Elizabeth Spiers: The fact that the person who owns the trust can also be the beneficiary at the same time is bonkers. So yeah, this is, I mean, it is all part and parcel of this idea that the United States has basically become the biggest tax haven in the world. Yeah, that's what it seems like. There's another rule that the Treasury Department has postponed, which would subject the hedge fund industry and the private investment advisor industry to stricter AML, anti-muttering, muttering, anti-money laundering. We should have anti-muttering laws on podcast. Anyone who mutters on the podcast gets investigated by the FBI.

18:20So they're postponing that too, because I guess hedge funds, private investment advisors, they don't have to be as strict about knowing their customers and reporting suspicious activity the way the banks are. I didn't look into this as much, but I was like, what? Is that right? Yeah, well, banks have insane AML and reporting requirements. And I haven't spent quite as much time looking at hedge funds in this context. I have spent a bunch of time looking at art galleries in this context. And so, like, you know, obviously people talk about art as a means of money laundering. And so the FBI and various people are like, oh, if you're an art gallery and you're selling a piece for millions of dollars, then you should know who you're selling it to.

19:02And there's, like, KYC laws there. And the art gallery is like, don't ask me to do that. That's crazy. That's genuinely burdensome. And it will actually make it much more difficult for me to sell art to someone who's going to keep it in a free port in Switzerland or whatever. And so there's actually a genuine big debate going on in the art world about what is the level of KYC and AML that makes sense in art. And I'm sure that debate is going on in hedge funds as well.

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23:28One of the things that we're basically talking around here is this idea that normally when we, you know, one of the big themes of Slate Money is that we talk about capital and labor, we talk about like businesses and individuals, and so they're like different things. But on some level, everything is individuals. Everything in the world is owned by a person. And every so often you get these headlines where you're like, wait, is that a business or is that a person? And it's hard to tell. And one of the headlines that is in the news right now is this guy, Mark Walter, who runs Guggenheim Investments, which is, you know, and he's this billionaire guy.

24:11and it's Guggenheim Investments, Mark Walter, and he has these insurance companies, and his insurance company is him, or are they companies? And it's hard to tell. Anyway, he's under investigation. The insurance companies might not be as robust as they had made themselves out to be. They might need to raise a bunch more capital in order to shore themselves up. And so then Mark Walter winds up selling his prized possession, which is majority stake of the Los Angeles basketball team, to a couple of others. billionaire types. Two best buddies. Two best buddies, Josh Kushner and Bob Iger, May-December romance.

24:49And when you look at this story of all of these different entities, the insurers and Guggenheim Securities and Thrive Capital and Josh Kushner and Bob Iger, and you're like, where does the company end and the individual begin? And it's basically impossible to tell like the lakers part of like thrive eternal or this weird company that's just been set up who knows no one knows does it matter like it's all just so fuzzy so what happened was josh kushner who is the brother of jared kushner who is the son-in-law of the president who is a investor guy very successful successful investor invested in instagram did a great deal there and has open-end AI investments, has a company called Thrive that's broken up into three parts for reasons I don't really understand, and is married to Karlie Kloss.

25:44Speaking of private equity arm candy, he was original private equity arm candy. I'm referring, of course, to the Wall Street Journal story last week, which declared the hottest arm candy of the summer was private equity boyfriend or something. Anyway, sorry, I'm sidetracked. Karlie Kloss, by the way, is also like the savior of publishing. She's just appointed Hugo Lindgren to start running Life, which she bought. And yeah, she's now like employing journalists. So we like her. Okay. So Josh Kushner, brother of Jared, etc. teamed up with Bob Iger, former Disney CEO, two-time Disney CEO, just couldn't stay away from Disney and had to come back CEO.

26:26The two of them have teamed up and bought Mark Walter's stake in the LA Lakers for$12.5 billion. Well, for half of$12.5 billion. They've bought 50 % of it at the$12.5 billion valuation. Okay. See, right there, you start to zone out on it. And it's not clear exactly what happened because Walter just bought his stake last year, which this is really unusual, apparently. Apparently, once a billionaire buys a stake in a team they like hang on to it it's their prized possession whatever the the fast flip has gotten everyone's attention and their speculation of like well i guess he needs more money he's being investigated he needs to raise capital to like smooth out the stuff that's under investigation so josh and bob called at just the right time to be like yeah they were like hey i hear you need some cash yeah would you like six billion dollars is that is that like an amount of cash that would be useful to you is that good and he's like yeah and meanwhile josh kushner has like billions of dollars burning a hole in his pocket because he was meant to be giving them to jenny infantino to buy the world cup and then uefa and conca-caf basically threw a fit and said no fucking way you're not privatizing the world cup and so that deal fell through and josh kushner was like shit now what am i going to do with all of this money that i was going to put into sports ball i guess maybe if i'm not going to buy fifa i'll buy the lakers instead

27:53Elizabeth Spiers: yeah he'd also already bought a minor league nba team and he'd taken a stake in the miami heat i think this is just a billionaire activity you run around buying sports teams kind of actually i think it's new i mean billionaires have been buying sports teams since time immemorial old that is not new but what's new is that it's it's like it's becoming this kind of asset class rather than a passion project Iger famously is a Clippers fan and he gave this interview on a podcast a few years ago where he's like I could never support the Lakers because I grew up supporting the Knicks and the Lakers was the big enemy of the Knicks and now he's like well I could never support the Lakers but I can buy them normally billionaires buy the team they grew up supporting but now they'll just buy any old team and that i think is new and what's also is new for the nba at least is that until 2020 they passed a rule in 2020 allowing private equity firms to invest in nba teams so this wasn't allowed non-controlling interest you can only have like a minority stake whereas eiger and kushner as far as i can make out have bought a controlling interest so it's because yeah it's and it's very weird right 2025 they increase the limit yes reading on the google on the google as we speak yes and that's what's new and meanwhile and just because i wrote about it this week i should probably throw it in there just for shits and giggles we have aria manual another one of those la billionaire types just spent six billion dollars to buy atg which is the company that bought jumanson which was one of the big theater owners in new york atg owns 70 theaters including seven in new york on broadway and 10 in the west end of london and a bunch of other ones in germany and spain and i mean it's like you know i'm all into live shit i own the freeze art fair and the miami open and obviously a bunch of like wrestling stuff and he's like it's all live entertainment and i think live entertainment is the future and I'm spending$6 billion to make this bet on theaters, which is super interesting and mildly depressing for those of us who have to take out a second mortgage every time we go to see a show on Broadway.

30:06Why?

30:06Elizabeth Spiers: Because you think prices will go up? Yes. I think strategically it makes sense for Ari Emanuel to buy theaters. The sort of buying sports ball teams is a completely different impulse. Although I do agree that they're treating it like assets. And the LA Lakers are now probably the most valuable franchise in the NBA anyway. And they're high status. Owning the Lakers has always been a kind of ambition for a lot of billionaires. But to my point, owning the Lakers has been an ambition for a bunch of billionaire Lakers fans. But it turns out that the two people who bought them are not Lakers fans at all.

30:41It's kind of ironic.

30:42Elizabeth Spiers: There's a prestige element, though. Iger always rooted for the Clippers, which are the other LA basketball team. Which are owned by Steve Ballmer, right? I think so, yeah. And he said that he became a Clippers fan because whenever he went to work at Disney, he was in LA and he'd grown up a Knicks fan. And he couldn't be a Lakers fan at the time because the Lakers were the rival to the Knicks. So he's like, and also Clippers season tickets were much cheaper and easier to get. So he's a decades-long Clippers fan who now owns the Lakers. Tell me, Elizabeth, why you think that Ari Emanuel buying theaters is a strategic good thing to do?

31:24Elizabeth Spiers: Well, I mean, his area of expertise is entertainment. And I think there is now, there's more of a business opportunity for things that go back and forth between theater and other types of entertainment. Look at how big the Wicked franchise is. Even if he really, you know, maybe not a specialist in theater specifically, there's so much overlap with the larger Broadway shows with other forms of entertainment, particularly on screen entertainment, that strategically it kind of just as potentially an investment in IP, it makes sense. Yeah, the biggest grossing single piece of intellectual property in the history of humanity was originally a musical, is The Lion King.

32:06Oh, interesting.

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33:10this is hannah burner the co-host of giggly squad we could all just stay in bed scrolling through other people's vacations forever but where is the fun in that the best memories come from stepping outside of your little bubble and being open to the unexpected and what better way to be open to the unexpected than finally booking that trip to europe you guys know i'm a delta girly every time I go I get my Delta headphones and when I fly to Europe Delta treats me like a queen and they'll treat you too. I was always a little nervous about navigating a foreign country but then I realized it's so important to grow and see different cultures and to put yourself in different situations and Delta held my hand the whole time.

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34:34Elizabeth Spiers: The collateral is kind of melting because of climate change. Or rather, what's happening is the collateral, which is giant wheels of Parmesan in the Parmesan bank in Italy, are having temperature control problems because it's getting hotter. So the banks are having to invest in more cooling equipment and stuff like that. But also, it's affecting milk production, because apparently when it gets hot, the cows lie down and they don't eat as much. My favorite sentence of any news story this week is like, when it gets over 40 degrees Celsius, the cows just lie down. I feel like humans do this too. I mean, it's just like total, 100%, if I was a cow and it was 40 degrees outside, which is like 100 Fahrenheit.

35:15Yeah, of course you're going to fucking lie down. Well, that brings me to my questions, of which I have several. And I'm trying to reach, sadly for me, I'm trying to reach cheese experts from Italy on a Friday. So good luck to me. In August. So basically how it works is the guys who make the cheese or gals, they have to age the cheese for at least 12 months, if not longer. And instead of wait around... Often 36 months in the case of Parmesan. If not longer. So what they do is they get a cheese loan and they put their cheese up as collateral and they get the money for the cheese up front so they don't have to wait one, two, three years to sell the cheese to make the money.

35:57And then originally they would always have to put the big wheel of cheese in the official cheese banks of these companies and they would hold them in the vault and it's temperature controlled and blah, blah, blah. Question one already. All the stories say, thanks to the advent of blockchain technology, they can keep the cheese on their own premises. They are allowed to store the cheese. Why blockchain is involved with that is unclear to me. Maybe you can answer it. So, okay, so now it costs more to store the cheese. So I want to know how the cheese banks are accounting for that higher cheese storage costs.

36:33Are they putting a haircut on already agreed upon lending arrangements? So what's happening is the cheese banks are losing money. The financing for the cheese is locked in when the cheese gets put in the vault. And the cheese bank is like, we'll shove it in the vault and we will sit on it and we will earn interest. and then when it sells in the future, we will take all of our money back plus interest and give you what's left over. And that's a great business to be in because it's a very low-risk banking business to be in, right? They're sitting on the cheese, or now they have some blockchain thing that allows the cheese to be somewhere else.

37:09But ultimately, they have this cheese collateral and the cheese is safe in their vaults and it doesn't cost much to keep a cheese. But now there's this massive heat wave in Europe and the cost of just sitting on a wheel of cheese has skyrocketed because it turns out that you can't just keep a cheese in a vault anymore. You need to air condition the vault and the cost of electricity, cost of energy has gone up because of the Iran war and the amount of energy needed to air condition the vault has gone up because of the heat wave. And so suddenly they have all of these unexpected expenses where they used to think, well, I'm just, you know, It used to be just like, you know, the New York Fed sitting on a bunch of gold.

37:50It doesn't really cost them very much. It's just sitting there. Now, there's like active money you need to spend in order to make sure that the cheese doesn't melt. And that money is not in their P &L. And so they are hurting the poor cheese bankers.

38:05Elizabeth Spiers: Longer term, though, if the cows keep lying down and not eating enough and there's less cheese, does the price of cheese go up? And does that offset all the additional expenses? No. We just have less parminate. The price of cheese per wheel goes up, but the number of wheels goes down. So that your total profit goes down, even if your unit economics improve, your overall economics deteriorate. And the cheese banks, though, going forward can charge higher interest rates to store the cheese for their cheese loans. So this will work itself out. Maybe they'll have an air conditioning fee on top of the interest or something like that.

38:44Yeah, so going forward, it works itself out. But at the moment, it's like, bummer. Going forward, like, yeah, I do think this all points in one direction, which is more expensive pharmacy.

38:53Elizabeth Spiers: I think cheese chain is smart, though. Cheese black chain. Because especially with newer facilities, they can basically, they're offloading the cost of modernizing to the farmers who either already have good facilities or they don't, or if they're newer companies. But if they don't, you know, and the collateral melts, that's terrible for the lender. I don't understand. I'm a little bit with Emily on this one. I don't understand how blockchain stops the cheese from melting. I think that's just a contract mechanism. But what it does do is the cheese bank has only so much room for cheese. And so it allows them to enter into contracts with more farmers without having to build whole new facilities.

39:34Yeah, I think this idea of like we're space constrained is going to go away now that the amount of cheese being produced is fallen. Can we talk again about how the arrangements work in the first place? So I have the cheese. Are you the cheese maker or are you the cheese bank? I'm the cheese maker. Okay. And I have the cheese and I can't sell it for another two years. So I go to the cheese bank and I say, give me$100 advance for my cheese. Like how does it work? Exactly. Do I make interest? I'm the bank. You give me the cheese. I give you$100. Yeah. Right. And then in a year's time, the cheese sells for$200 and I'm charging like 10 % interest.

40:18So I keep$110 of that. So I basically take my$100 back plus$10 interest. And then I give you the other 90. So instead of you having to wait two years for$200, you can get$100 up front and then another 90 in a year's time. And so that's better for your cash flow. what if you get a hundred up front and then your cheese melts exactly and then if well so yeah that's when everything goes pear shapes right because let's say that you give me the cheese i have some kind of a power failure or i just never bothered air conditioning my cheese vault and then the cheese melts and then i can't sell it for two hundred dollars then you're like I want to sell my cheese it's time to sell the cheese and I'm like well you can't sell the cheese because it's melted and so then who owes what to whom is not clear it's a bit of a shit show yeah it's not clear but isn't there provision in that I would think the liability would fall in the bank

41:17Elizabeth Spiers: in that case yeah probably but the question is how much yeah maybe I owe you like the hypothetical value of the cheese if I was able to sell it and it hadn't been melted maybe I just like it's not obvious how much more I owe you at that point I probably owe you something. When I borrow the cheese money, do I make payments on it? No, no, no. I'm not making any payments. But maybe that's the other. On the one hand, you're expecting to be able to sell this cheese for$200. So I owe you some money that you reasonably expected you would be able to get when the cheese matured. On the other hand, yeah, it's actually true that I lent you money and you owe me that money.

41:55And so maybe I can turn around and say, well, the cheese is melted. I can't sell it. So you owe me the$100 back plus$10 interest. So like, yeah, who knows how that shakes out? I would bet that that's how it works. But I actually don't feel confident about my bet at all. So that's why I want to talk to someone who is in the cheese business on a Friday in August. In Italy. Good luck with that. Thank you so much. Especially when the time zone situation means that the key important morning hours when you can reach Italy are the time when you're podcasting. Correct. So the open questions are, how is the blockchain involved and what happens if the cheese totally melts?

42:34By the way, the cheese is not going to totally melt as far as I could tell from what I've read in the prep. It's just costing more to store said cheese. Also, if I'm like an amazing blockchain computer hacker, can I steal a bunch of cheese just by like typing on my computer keyboard? Can I ask my Claude Fable frontier model to, like, hack into the cheese blockchain and steal me a bunch of Parmesan? We will answer that next week, by the way, when we talk to Noah Breyer about artificial intelligence.

43:06Elizabeth Spiers: I feel like Who Moved the Cheese is a reference that if we have any Gen Z listeners, they're just not going to get it. That was some, like, really dumb business book, right? Yeah, they talk about it on my favorite podcast. What is it, 90s or early aughts? I think it was 90s. as loyal listeners will know that I love the podcast If Books Could Kill because I had on one of the co-hosts on Money Talks a while back and they did a whole deep dive into who moved my cheese and just tore it to shreds. And so what does that mean? I forget. It was like some note some guy in an office sent around and it was something about business.

43:39The metaphor for something. Business world. I don't know. You know what? I don't know. Cut this part, please. Cut the cheese. Cut the cheese. It had to be that. Cut the cheese.

44:01Numbers round. Elizabeth, what's your number? it.

44:03Elizabeth Spiers: My number is 515, and that's the number of pages in a dossier that McDonald's sent Wired reporter Reese Rogers. Because he lives in California, you can ask companies for the private data that they've collected on you. And McDonald's uses its loyalty program to predict your purchases and stuff like that. So the best number in the dossier was they predict the likelihood of customer attrition. And for Reese Rogers, the likelihood is zero. They predict that he's just going to eat at McDonald's forever until he dies. There's 515 pages of information about this one guy that McDonald's has? I think a lot of it's just purchase history.

44:43Elizabeth Spiers: Actually, it boils down to is that he eats at McDonald's maybe once every three weeks. But every time he eats at McDonald's, they know that it's him. Yes, because he's in a loyalty program. Because he uses his loyalty program. That's wild. They also have like a category for what kind of customer he is. And his core behaviors are food-led afternoon snack. Although that makes me curious about like what afternoon snack would not be food. No, it's drink-led. A matcha. Yeah. If you get a matcha in the afternoon, that's a drink-led afternoon snack. Emily, we need to move on. What is your number? My number is$125.

45:24It's$125. That is the price of Summer's Hottest It Bag. Yes, Summer's Hottest It Bag is a Hulkin tote, collapsible. And why I'm talking about it is because it's this tote bag that has wheels on it, and it's collapsible. So when you're not wheeling it, schlepping it around New York City, you can just kind of like fold it up and carry it over your shoulder. You're carrying the wheels over your shoulder? Yeah, it looks kind of neat. Are the wheels on the outside or are they on the inside? They're on the bottom, you know, like a rolling cart.

45:59Elizabeth Spiers: People take them to the grocery store and pile all the heavy shit and then they drag them home. Yes. But what is funny to me is if you look at the pictures of this like it bag, and some of them are metallic gold, metallic silver, but some of them are just like black and they're a little bit crinkly looking. I grew up going to my grandma's house in Flatbush, Brooklyn. She had like a metal shopping cart that she wheeled around. I mean, you see these ladies still to this day. We have one ourselves. This is what it is, okay? It looks exactly like just my boobie, you know, schlepping the card around.

46:35I called her Bobby, actually. But schlepping her card around. My boobie was called Bobby, yes. I love that. But the story is in vogue, but it's just pictures of like very chic and fashionable young women. Everything old is new again. schlepping these big sacks around like, you know, like my Yiddish grandmother.

46:54Elizabeth Spiers: By contrast, I learned today from the Times, and this was almost my number, that the bag of the summer is the Nantucket Friendship Basket, which is a hand-woven basket that looks about what it sounds like. It looks like a picnic basket kind of. I see. And they're like$2 ,400 for one. You have to wait like nine months for it to get there. And now I think this is some weird influencer. Nantucket is hot right now. thing. But influencers are not hot because is it Nantucket that had the sign? Yeah, Nantucket does not like the influencers. Well, there's dueling summer it bags, which will win. I think this one is very practical.

47:29All right. I'm moving on with my own number, which is 9 ,455, which is the number of votes that Count Binface got in the Clacton by-election.

47:42Elizabeth Spiers: Oh, is Count Benfeyes related to Lord Buckethead or are these two separate like English kind of? Not yet. Separate from Lord Buckethead and also separate from Screaming Lord Such, who was the original novelty candidate. But this is by far the highest number of votes that a novelty candidate has ever received. Sadly, no. Nigel Farage won with 22 ,239 votes. That's not, I mean, it's not close, but it's not nothing. But Count Binface got 27 % of the vote. Count Binface had some good points. We're almost there with your country, man. It's only a matter of two. They're going to run out of people to run for prime minister after a while, right?

48:27I was really rooting for Count Binface. And I honestly thought there was a chance he might win because all of the major political parties boycotted the election. so it was really just Farage against Binface. And basically, Nigel Farage resigned from Parliament for some dumb reason that made no sense, which you're not allowed to do. And so if you want to resign from Parliament, you need permission from the Home Secretary who gives you some weird title which you hold while you're resigning so that you can resign from Parliament. And the Home Secretary was like, look I have no idea why this guy wants to resign from parliament but if he wants to spend his summer arguing against a bin who am I to stop and so but Count Binface was like he did all of the rounds of all of the you know interview shows and he was brilliant and I'm quite sad that the summer of Count Binface is now over is it known who Count Binface is so this is my favorite my favorite part of the whole story the economist wrote this whole article explaining why count bin face was not going to win the election and you would think the reason why count bin face was not going to win the election would be something like it's a guy with a bin on his head who claims to be an intergalactic space warrior or like all of his positions are complete jokes like or like his main policy proposal is to like move the hand dryer in the toilets at the pub so like all of which is like perfectly good reasons to like no i don't want this person to represent me in parliament and make laws but no that was not the reason why people didn't vote for count binface the reason why people didn't vote for count binface is because he went to oxford

50:20Elizabeth Spiers: and in clactin anti-intellectualism strikes again exactly all right i think that's it for us this week thank you for listening thank you to jessamine molly for producing thank you for emailing us on slate money at slate.com and we have a slate plus segment on just how much money it is possible to make in journalism millions of dollars get six million dollar checks just in the mail. It's wonderful being a journalist. Everyone should do it. That's coming up in Slate Plus. Otherwise, thanks for sticking with us. And we will be back next week with more Slate Money.

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